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In 2012, the Copyright Act was amended to include new provisions outlining prohibitions for circumventing technological protection measures (“TPMs”). The recent decision of Nintendo of America Inc v King, 2017 FC 246, is the first time the Federal Court of Canada substantively considers and applies the new provisions relating to TPMs. The decision is noteworthy for its discussion on the breadth of TPMs and the Court’s willingness to award significant damages for TPM circumvention.

Nintendo of America Inc. (“Nintendo”) is famous for selling and distributing popular and well-known video games and video game consoles. Nintendo uses various measures to control access to copyrighted works on the Nintendo DS, 3DS, Wii video game consoles. For example, game cards utilize specific shape, size, and electrical connection arrangements (“Physical Configuration”) for interfacing with game consoles. Game consoles also perform security checks of “Header Data” stored on game cards before allowing access to games. Further, communications between the game consoles and game cards are encrypted and scrambled.

Go Cyber Shopping (2005) Ltd. (“Go Cyber”) offered for sale and sold devices designed to circumvent the security measures employed by Nintendo. For example, Go Cyber sold “game copiers” allowing users to play unauthorized copies of Nintendo DS or 3DS games and “mod chips” for modifying Wii game console firmware or disabling security routines. These devices allowed users to download and play pirated copies of Nintendo games.

In addressing the issue of TPMs, the Court reviewed Parliament’s rationale for protecting TPMs and noted the importance of digital locks to creative companies, such as video game developers. The Court ultimately found that Go Cyber’s devices and actions contravened the anti-circumvention provisions relating to TPMs in the Copyright Act.

First, the Court gave broad scope as to what “protection measures” may be a TPM. While there was no dispute as to whether Nintendo’s console security checks or encryption / scrambling measures are TPMs within the meaning of the Copyright Act, Go Cyber disputed whether the physical configuration of Nintendo game cards are TPMs. The Court reasoned that there is no suggestion in the Act that a TPM requires transformation of a protected work (e.g., descrambling or decryption) and found that the physical configuration of Nintendo game cards can be a TPM within the meaning of the Copyright Act. The shape of the game cards and arrangement of electrical pins “operate much like a lock and key” and would be “quite effective in controlling access to genuine Nintendo Games”.

Second, the Court addressed what it means to “circumvent” a TPM. Go Cyber argued that the shape of its “game copiers”, designed to fit into a game card clot of a Nintendo game console, is a replication of a physical configuration TPM and not circumvention of the TPM. In rejecting Go Cyber’s submissions, the Court reasoned that replication is not incompatible with circumvention. The Court noted that “[a] burglar who uses an illicitly copied key to avoid or bypass a lock to access a house is no less of a burglar than one who uses a lock pick”.

Third, Go Cyber argued that its sale of circumvention devices can be for the purpose of making Nintendo game consoles “interoperable” with homebrew software. Homebrew software for Nintendo’s consoles refers to third party software designed for use on the consoles, but the software may not be necessarily owned or licensed by Nintendo. The Court gave greater weight to evidence showing that websites purporting to offer homebrew software also offer, in greater quantities, unauthorized copies of or access to Nintendo’s copyrighted games. Evidence that there are legitimate paths for developing software on game consoles without circumventing Nintendo’s TPMs and that there is no need for TPM circumvention to achieve interoperability was accepted by the Court.

On the issue of whether statutory damages for TPM circumvention should be on a “per-work” basis or a “per TPM circumvented” basis, the Court showed a willingness to broadly enforce TPMs to protect copyright owners. Damages were awarded on a “per-work” basis, resulting a $11.7 million dollar award for TPM circumvention (e.g., maximum $20,000 statutory damages x 585 Nintendo video games). The Court noted that “[a] robber breaks a lock because of the value behind the lock, not because of the value of the locks”. The Court noted that if Nintendo had not invested millions of dollars to create a library of valuable video games, Go Cyber would have no market for its TPM circumvention devices and activities.

The Court also awarded punitive damages of $1,000,000, ordered an injunction prohibiting Go Cyber from further trafficking any devices to circumvent Nintendo’s TPMs, and ordered Go Cyber to deliver up offending TPM circumvention devices.

The Nintendo decision provides welcome guidance on the metes and bounds relating to the scope of protection afforded by the prohibition on TPM circumvention.